FRTIB backtracks on investing in Chinese-linked index fund

By Lia Russell

May 13, 2020

In response to a White House directive, the Federal Retirement Thrift Investment Board said it would defer a planned decision to shift its international funds to an index that contained firms with links to the Chinese government.

“Due to a meaningfully different economic environment related in large part to the impact of the global COVID-19 pandemic, as well as the nomination of three new FRTIB Board Members, pending further study, the FRTIB Board is delaying the implementation of the I Fund Benchmark change to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index,” the FRTIB said in a statement to reporters on May 13.

National Economic Council Director Larry Kudlow and National Security Advisor Robert O’Brien opposed the shift, citing economic and national security concerns that the index contained firms that supported China’s military and surveillance operations.

They also noted that the ongoing COVID-19 virus had originated in the Wuhan province.

The FRTIB oversees the Thrift Savings Plan, which manages over $500 billion in federal employees' and armed service members’ retirement funds.

In November, the FRTIB reaffirmed a 2017 decision to invest its I-Fund in the new market index, drawing condemnation from both Democratic and Republican senators.

On May 6, President Donald Trump nominated three people to the board to replace current FRTIB Chairman Michael Kennedy and two other members whom former President Barack Obama had appointed to serve on the board.

About the Author

Lia Russell is a staff writer and associate editor at FCW covering the federal workforce. Before joining FCW, she worked as a freelance labor reporter in San Francisco for outlets such SF Weekly, The American Prospect and The Baffler. Russell graduated with a bachelor's degree from Bard College.